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The Most Important Number In The Entire U.S. Economy

By Michael Snyder, on July 31st, 2013

There is one vitally important number that everyone needs to be watching right now, and it doesn’t have anything to do with unemployment, inflation or housing. If this number gets too high, it will collapse the entire U.S. financial system. The number that I am talking about is the yield on 10 year U.S. Treasuries. When that number goes up, long-term interest rates all across the financial system start increasing. When long-term interest rates rise, it becomes more expensive for the federal government to borrow money, it becomes more expensive for state and local governments to borrow money, existing bonds lose value and bond investors lose a lot of money, mortgage rates go up and monthly payments on new mortgages rise, and interest rates throughout the entire economy go up and this causes economic activity to slow down. On top of everything else, there are more than 440 trillion dollars worth of interest rate derivatives sitting out there, and rapidly rising interest rates could cause that gigantic time bomb to go off and implode our entire financial system. We are living in the midst of the greatest debt bubble in the history of the world, and the only way that the game can continue is for interest rates to stay super low. Unfortunately, the yield on 10 year U.S. Treasuries has started to rise, and many experts are projecting that it is going to continue to rise.

On August 2nd of last year, the yield on 10 year U.S. Treasuries was just 1.48%, and our entire debt-based economy was basking in the glow of ultra-low interest rates. But now things are rapidly changing. On Wednesday, the yield on 10 year U.S. Treasuries hit 2.70% before falling back to 2.58% on “good news” from the Federal Reserve.

Historically speaking, rates are still super low, but what is alarming is that it looks like we hit a “bottom” last year and that interest rates are only going to go up from here. In fact, according to CNBC many experts believe that we will soon be pushing up toward the 3 percent mark…

Round numbers like 1,700 on the S&P 500 are well and good, but savvy traders have their minds on another integer: 2.75 percent

That was the high for the 10-year yield this year, and traders say yields are bound to go back to that level. The one overhanging question is how stocks will react when they see that number.

“If we start to push up to new highs on the 10-year yield so that’s the 2.75 level—I think you’d probably see a bit of anxiety creep back into the marketplace,” Bank of America Merrill Lynch’s head of global technical strategy, MacNeil Curry, told “Futures Now” on Tuesday.

And Curry sees yields getting back to that level in the short term, and then some. “In the next couple of weeks to two months or so I think we’ve got a push coming up to the 2.85, 2.95 zone,” he said.

This rise in interest rates has been expected for a very long time – it is just that nobody knew exactly when it would happen. Now that it has begun, nobody is quite sure how high interest rates will eventually go. For some very interesting technical analysis, I encourage everyone to check out an article by Peter Brandt that you can find right here.

And all of this is very bad news for stocks. The chart below was created by Chartist Friend from Pittsburgh, and it shows that stock prices have generally risen as the yield on 10 year U.S. Treasuries has steadily declined over the past 30 years…

When interest rates go down, that spurs economic activity, and that is good for stock prices.

So when interest rates start going up rapidly, that is not a good thing for the stock market at all.

The Federal Reserve has tried to keep long-term interest rates down by wildly printing money and buying bonds, and even the suggestion that the Fed may eventually “taper” quantitative easing caused the yield on 10 year U.S. Treasuries to absolutely soar a few weeks ago.

So the Fed has backed off on the “taper” talk for now, but what happens if the yield on 10 year U.S. Treasuries continues to rise even with the wild money printing that the Fed has been doing?

At that point, the Fed would begin to totally lose control over the situation. And if that happens, Bill Fleckenstein told King World News the other day that he believes that we could see the stock market suddenly plunge by 25 percent…

Let’s say Ben (Bernanke) comes out tomorrow and says, ‘We are not going to taper.’ But let’s just say the bond market trades down anyway, and the next thing you know we go through the recent highs and a month from now the 10-Year is at 3%. And people start to realize they are not even tapering and the bond market is backed up….

They will say, ‘Why is this happening?’ Then they may realize the bond market is discounting the inflation we already have.

At some point the bond markets are going to say, ‘We are not comfortable with these policies.’ Obviously you can’t print money forever or no emerging country would ever have gone broke. So the bond market starts to back up and the economy gets worse than it is now because rates are rising. So the Fed says, ‘We can’t have this,’ and they decide to print more (money) and the bond market backs up (even more).

All of the sudden it becomes clear that money printing not only isn’t the solution, but it’s the problem. Well, with rates going from where they are to 3%+ on the 10-Year, one of these days the S&P futures are going to get destroyed. And if the computers ever get loose on the downside the market could break 25% in three days.

And as I have written about previously, we have seen a huge spike in margin debt in recent months, and this could make it even easier for a stock market collapse to happen. A recent note from Deutsche Bank explained precisely why margin debt is so dangerous…

Margin debt can be described as a tool used by stock speculators to borrow money from brokerages to buy more stock than they could otherwise afford on their own. These loans are collateralized by stock holdings, so when the market goes south, investors are either required to inject more cash/assets or become forced to sell immediately to pay off their loans – sometimes leading to mass pullouts or crashes.

Deutsche Bank is the largest bank in Europe, and at this point they have 55.6 trillion euros of total exposure to derivatives.

But the GDP of the entire nation of Germany is only about 2.7 trillion euros for a whole year.

We are facing a similar situation in the United States. Our GDP for 2013 will be somewhere between 15 and 16 trillion dollars, but many of our big banks have exposure to derivatives that absolutely dwarfs our GDP. The following numbers come from one of my previous articles entitled “The Coming Derivatives Panic That Will Destroy Global Financial Markets“…

JPMorgan Chase

Total Assets: $1,812,837,000,000 (just over 1.8 trillion dollars)

Total Exposure To Derivatives: $69,238,349,000,000 (more than 69 trillion dollars)

Citibank

Total Assets: $1,347,841,000,000 (a bit more than 1.3 trillion dollars)

Total Exposure To Derivatives: $52,150,970,000,000 (more than 52 trillion dollars)

Bank Of America

Total Assets: $1,445,093,000,000 (a bit more than 1.4 trillion dollars)

Total Exposure To Derivatives: $44,405,372,000,000 (more than 44 trillion dollars)

Goldman Sachs

Total Assets: $114,693,000,000 (a bit more than 114 billion dollars – yes, you read that correctly)

Total Exposure To Derivatives: $41,580,395,000,000 (more than 41 trillion dollars)

That means that the total exposure that Goldman Sachs has to derivatives contracts is more than 362 times greater than their total assets.

And remember, the biggest chunk of those derivatives contracts is made up of interest rate derivatives.

Just imagine what would happen if a life insurance company wrote millions upon millions of life insurance contracts and then everyone suddenly died.

What would happen to that life insurance company?

It would go completely broke of course.

Well, that is what our major banks are facing today.

They have written trillions upon trillions of dollars worth of interest rate derivatives contracts, and they are betting that interest rates will not go up rapidly.

But what if they do?

And the truth is that interest rates have a whole lot of room to go up. The chart below shows how the yield on 10 year U.S. Treasuries has moved over the past couple of decades…

As you can see, the yield on 10 year U.S. Treasuries was hovering around the 6 percent mark back in the year 2000.

Back in 1990, the yield on 10 year U.S. Treasuries hovered between 8 and 9 percent.

If we return to “normal” levels, our financial system will implode. There is no way that our debt-addicted system would be able to handle it.

So watch the yield on 10 year U.S. Treasuries very carefully. It is the most important number in the entire U.S. economy.

Good question. The central banks worked with Goldman Sachs and Company to take a dump on gold so they could buy low during the ensuing panic. At the moment, they are working to keep metal prices low. Why? Perhaps so they can purchase more metals?

I’m going to go out on a limb and say that if interest rates can’t be controlled and bonds become less desirable, then you see a huge movement to precious metals. Free trade in precious metals may actually be legally restricted in this case, (economic emergency measures) so the price of gold may actually become moot.

Mondobeyondo

It will go up. Paper assets will go down. Because people will see gold as a valuable asset, and paper money as – paper.

El Pollo de Oro

“I call them GC’s three Gs: guns, gold and a getaway plan.”—Gerald Celente

Hammerstrike

Their pensions already does keep upp with inflation.

Scumbag boomers believed they would have a nice retirement, with SHTF being something the next generation of retiree would have to deal with, not ssso!

golddust34

Us boomers pensions are nothing like our parents. The WWII retirees got much better retirement packages. Many boomers are working well past retirement because they can’t afford not to – especially in areas like New York City and its suburbs.

LorieK

Wow. As a 59 yr old “boomer” I must take offense at being described as a “scumbag”. What is your issue with someone having a pension? Wouldn’t YOU like to have one and be able to depend on that to help you eat when you can no longer work? I know I would, and would wish that for my kid, and their kids. I know plenty of those in my father’s generation, and loads of those in mine wanted and expected better lives for the next generations. Very few of us realized the extent of greed and corruption which had/is degenerated/ing the opportunities for all generations. You are an idiot if you think any caring parent would want the next generation to be worse off than their own.

Also, what makes you think there are so many “boomers” out there with pensions? I don’t have one. I’ve worked since I was 15, whatever kind of “retirement” I have, if I ever choose to have one, or are able to, will be because of what I do for myself.

I would also add that my father worked in a refinery for 30+ years. He did so under AGREEMENT with the company that included retirement benefits. That was a promise, a contract, that the company made with my father for his labor all those years. Unions, of course, were part of those agreements. Contracts should be honored. It’s not a scumbag boomer thing. My mother worked from the time I was in the 6th grade. She had no retirement benefits with her place of employment. When she stopped working, she stopped getting money. It is because of the benefits from my father’s years of work and the agreement made with that company, that now allows my 83 yr old widowed mother to still stay in the small family home and be able to pay bills and eat.

My heart breaks for how bad it is going to get for everyone. Scumbags, indeed.

Hammerstrike

That is the thing.

As it is, tens of millions of dependable people on both side of the Atlantic are ****ed.
There won´t be any retirement for many years and whatever shred are left is going to be seized by greedy bureaucrats and banksters.
Thanks who? Thanks boomers!

Jaf

It is not the absolute rates that matter so much as the effect it has on the aggregate debt it is applied to. Therefore, perhaps the product of the two i.e. rate and the amount of debt or even the product of them multiplied by the time left to maturity will be a more accurate measure of gravity of the effect. It is obvious that the DERIVITIVE instruments is another ball game that is here to break-down the entire dishonest, fraudulent and con game which is the Western USURY based economy created in the last 400 years and is high time it should collapse and be rid of.

K

Market nervous at 2.8%, shaking at 3.0, down the tube 3.3%, at least that is my best estimate. What does anyone else think?

MeMadMax

DON’T SHOOT! LET IT BURN!

Mondobeyondo

You saw “Saving Private Ryan” too? Cool!

skywatcher

What does any of this matter ? The Rothschild’s owned BIS (Bank for International Settelments, te central bank of central banks) said ” Te party is over, head for the door”.

LOOK OUT!

Paul Albrecht

whatever asshole, this number is only important if you don’t produce anything. people please remember that MONEY is only a medium of exchange. if you actually make things that can be bought and sold then worry not.

Mondobeyondo

In a sense, you are correct. Money is a medium of exchange. It is necessary to conduct financial transactions, eat, and so forth. The problem comes when money – and items bought with money – become your god. It is THE LOVE of MONEY that is the root of all evil (1st Timothy 6:10) – not money in and of itself. Wanna know a synonym for “the love of money”? GREED!!

And people LOVE their money here in the U.S. It goes hand in hand with the “keeping up with the Joneses” culture. Wall Street, big banks, Bernie Madoff, buy a new Honda or Chevrolet or Dodge (with a GPS system), Radio Flyer, etc – you need an Iphone, and an Ipad, and an Iblender, or you’re so 2005…, whatever – and that isn’t even the tip of the iceberg.

Paul Albrecht

good points. i disagree that money is necessary to eat. rather, knowledge and skill in the arena of producing food. hunting, fishing, foraging, farming. and do not forget BARTER!

golddust34

With all the financial problems Detroit is having, a news report I saw yesterday sounds like the ‘getting back to basics’ like growing your own food, etc. has already started there. Small groups of homeowners (apparently this is in a more suburban part of the city) are grouping together to create community gardens, barter for services, etc.

stockrocket

have you guys checked out Forex Kong? His general thesis is about the same, only seen through currencies / currency markets.

markthetruth

On Wednesday, the yield on 10 year U.S. Treasuries hit 2.70% before
falling back to 2.58% on “good news” from the Federal Reserve.

on ” Bad news made into Good Lies ”

the end…

ArigatouGozaimas

I wonder if it is possible for the Federal Reserve to become the overwhelming majority buyer of U.S. Debt? I think the key is the international buyers, if they decide U.S. debt is not worth quite as much to them as it once was, then the FR will have to step up the bond buying programs to keep Uncle Sam from going insolvent before the designated time.

China alone could bring down the rigged system, simply by selling a large portion of their treasuries. I personally think they might be interested in slow sell off at this point. It would hurt them badly if they caused a debt panic. Though it would hurt the States much, much more.

I’m sure Bernie will do everything in his power to ensure that the interest rate stays low. Obama will do everything it takes to keep international bond buyers happy. Doing anything else at this point would just serve to light a fuse for disaster.

I don’t even want to think about a derivatives collapse, combined with currency devaluation and government insolvency.

The U.S. is checked, mate. As painful as this is to say, the result of all this will be a new status for what was once termed a “hyper power”. The U.S. will become a militarily toothless, third world socialist, client state of whatever new power emerges to take its place.

It’s okay, our aristocracy will come out of it mostly unscathed. don’t expect the new government to be a Constitutional Republic in anything but name, if even that. Let’s just hope the time factor of these events is later rather than sooner.

((Wondering, is the reserve rate staying at near zero despite the bond rate increases?))

Chef

The government can never go insolvent because the Fed can continue their bonds to fund govt expenditures.

What can happen is that if the Fed ends up buying all-most of US bonds, the dollar will lose value something fierce (more than it has been already).

ArigatouGozaimas

They can default by choice, if they determine it to be the better option. Default or devaluation, both are equal. Technically the government is conducting a partial default as it takes on more debt, by keeping the value of the dollar low. This partial default has been going on for decades and is not an accident. A 1,000$ car in 1970 costing 30,000$ dollars today is no accident, the U.S. money system is designed for the dollar to slowly bleed value over time.

Mondobeyondo

Major trouble ahead. I see no way out of this predicament. We never should have gotten into this in the first place. But hindsight is 20-20. Live and learn, I mean, repeat the same mistakes over and over. (Isn’t that the definition of insanity?)

“Danger, Will Robinson, danger…”
Yes. We truly are “Lost in Space”.

Hammerstrike

Rather, an emotion-driven willingness to ignore inconvenient truths and to believe in pleasant illusions .

Except ignoring reality won’t change it.

http://americandictators.blogspot.com/ WarriorClass III

This was by careful planning and design, it has nothing to do with hindsight. It is nothing less than the complete takeover of the world by the Bankster Cartel, and you can bet they will not lose one bit of wealth when this comes tumbling down; but you will.

cherylmeril

People aren’t stupid, this was planned a long time ago. All you have to do is the math to predict the future. Money = debt.

2Gary2

Tax the rich MF corp and make them pay a living wage.

a study that some Walmart in WI was providing like 300 jobs – and
they got paid so poorly they qualified for about $900k in government
entitlements.

We subsidize employers paying low wages.

“Free Market… What the Market Will Bear”…. Hogwash!

Taxpayers and property owners are subsidizing these fast food outlets by providing their workers with food stamps, medicaid or sliding scale insurance, heating assistance, emergency room care. This is not a “free market” system.

Jaybird7

Then the price paid at these businesses will go up dramatically. Business will pass on the cost due to higher overhead… No free lunch

Ralfine

Then there will be competition.

Fair play.

Why should the taxpayer finance the profit of these big corporations? It’s sufficient that the taxpayer finances police, prisons, cameras, monitoring, supervision, intrusion into privacy, and the creation of terrorists all over the world.

Douglas M. Green

I think Jaybird is right, taxpayers or fast food customers will have to pay either way. There is competition whether food stamps, medicaid or sliding scale insurance, heating assistance and emergency room care is provided or not. If these things are provided, all fast food joints compete at lower prices. If they are not, all fast food joints pay higher costs and pass them off in higher food prices, but they still compete with one another. There is no competition only when one establishment is subsidized while another is not, which is not the case.

Ralfine

Don’t agree.
The competitor for expensive fast food is not another fast food chain.

I can buy a sandwich for 2 pounds in the supermarket, but for 1/2 pound I already get a whole bread. Add another 1/2 pound and I get lettuce, etc.

If I have a fridge and a hob and pan, I have more options.

And when I put veggies in pots on shelves near the windows I get even more options.
And with a balcony and garden I get still more options.

You can get big and strong with veggies only, just look at elephant, rhino and buffalo.

If you reduce your expenses you can safely reduce your income, and don’t need to take any demeaning job.

Douglas M. Green

I see your point and thought you meant from other fast food places. Better to go in higher wages and we’ll watch businesses contract and employees not worth their higher wages get fired for the reason you mentioned – people eating at home instead. Fast food jobs are not meant to be liveable wage jobs. They are for the young going to school or learning a trade or older to supplement other income. Let wages rise and companies close up shop or higher less people and jack up prices

Douglas M. Green

No subsidies like 2Gary2 says and let the free market determine wages. If someone wants a liveable wage, let them find a job. Fast food joints should only pay what they have to in order to get workers, no more. If wages are insufficient, they have to increase them or not have employees and go out of business.

Ralfine

In China there are a million workers missing, because nobody wants to work for minimum wage anymore.

What for? Every one of those who crash the economy and didn’t see it coming have probably a MBA.

Hammertime

All valid points

Len

Today, the low, low prices of fast food is being subsidized by the low wages paid to the employees. Perhaps the best indication of this is that poor people and fixed income retirees find that eating fast food is cheaper than cooking at home or eating food that is better for your body. I bet the pricing of sugar would have more to do with the price of fast food than would the doubling of the price of labor.

Jaybird7

Most of these corporations provide jobs so they are not the evil they are made out to be. the Majority are your fellow Americans trying to earn a living. I agree with you on not financing ” cameras, monitoring, supervision, intrusion into privacy, and the creation of terrorists all over the world.” but that is primarily the Federal Government responsible for that.

2Gary2

Business already passes on the cost to tax payers of their low wage jobs. Most of their employees are on food stamps. No more corporate welfare

El Pollo de Oro

Gary2: No, this is definitely not a free market system, that’s for sure. As Gerald Celente says, this a “fascist banana republic” that fits to a tee Mussolini’s definition of fascism: the merger of state and corporate power. Il Duce would be proud.

2Gary2, Let’s just shut down all private sector businesses. All we need is big government and more regulations. Then we’ll all be living in Utopia. Everyone should be forced to do what the government says. Dissent should be crushed. Just because it hasn’t worked in the past doesn’t mean it can’t work now if properly implemented by BHO. 2Gary2, I’m sure you agree.

2Gary2

I do not see what you posted had anything to do with what I said.

greyprepper

I see where you’re coming from but let me ask you this; how on earth would giving the government more tax dollars solve anything? At best they would use a SMALL fraction of the new revenue to fund social welfare programs. The rest would likely go to the Obama family’s next vacation. I know that sounds cynical but our govt has proven themselves to be obscenely irresponsible with money. Until we have a responsible, semi-honest govt (fat chance) further taxation will do nothing but burden the tax payers.

greyprepper

Don’t misunderstand me, I totally get the concept of putting pressure on big business with a tax burden. It’s just that I think the corruption runs too deep. Corporations, banks, politicians… they’re all in the same boat juggling money around amongst themselves. I dunno, call me cynical, call me naïve but I really don’t think the answer is that simple.

2Gary2

cynical, naive.

You did say to call you these things.

lois752

like Gary replied I’m taken
by surprise that some people can profit $8849 in a few weeks on the
computer. have you read this site link w­w­w.K­E­P­2.c­o­m

2Gary2

bottom line: If you can’t ‘afford’ to pay your employees enough to survive, you don’t deserve to be in business.

MeMadMax

Oh so now you want to take away the right to own a business now huh? Wow, communist must run thru your veins as thick and cold as the Ural mountains themselves!

2Gary2

wtf are you talking about? no one said anything about taking away the right to run a business. You need to stop drinking your own bath water. Are you retarded?

We have these things called standards. This is why there are child labor laws etc. With voters like you its no wonder the republicans still get elected.

MeMadMax

ДА ТОВАРИЩ!

piccadillybabe

That would mean 75% of employers these days should not be in business. Who can live on minimum wage with COL rising as we speak 24/7? Wait until the ACA becomes the law of the land and businesses cannot afford to insure their FT employees. This is not a business friendly country. We do nothing to help small business and the big corporations like Walmart are paying slave wages and pocketing billlions in profits. There is nothing in this picture that promotes growth and prosperity, more like a slow and painful ride to austerity. If the government did not intervene with poverty sustenance programs, we would really be in a mess.

2Gary2

well then 75% would not be in business. Easier to regulate the other 25%

Jim

The Fed will do whatever it has to ,to keep 10 year U.S Treasuries from moving to quickly in any direction. My guess is most people will become poor at a moderate rate and at some point many years from now there will be a break down of services/law and order that will lead to starvation, plague and war . Back to normal, if you read the last 1500 years of history.

Joel Peeters

Jim, about your guess. It could be the ideal scenario (if we can call it like that), but is it not too difficult, even for the Fed, to maintain a moderate rate in our inter-related economic world (US, China, Russia, EU, etc, etc)?

If we take into account the fact that, in today’s world, the news goes so fast, that the panic can enter the scene faster also. And against panic the Fed could be quite powerless. What do you think?

Jim

If China sold its U.S Treasuries to quick they would not get good value for them. So there is an incentive for large foreign investors not to sell to quick, if they do it at a moderate pace the fed can pick up the slack.
Under some sort of special circumstance there could be some sort of panic, if that happens god help us because the fed, what could they do, international Bank/Stock market holiday perhaps I don’t know .

Dee R

America was born in blood. America suckled on blood. America gorged on blood and grew into a giant, and America will drown in blood. This is the spectre that is haunting America, the spectre of Civil War II, a second civil war that will shatter America into several new ethnically-based nations. Many will denounce this truth as racist and as a call to violence. It is neither. Rather, it is the result of an objective examination of the historic, demographic, political, economic, and military developments that are relentlessly propelling America towards a second civil war. Simply and directly put, America will explode in tribal warfare in our lifetime and shatter into several new ethnically-based nations. And as America breaks up the very concept of multiethnic democracy will likewise be forever shattered. Artillery
will blast our cities to flaming wastelands infested with psychotic snipers. Packs of feral dogs will tear at charred corpses hanging out of burnt-out tanks. Long columns of doomed refugees will clog our highways. Bands of guerrillas will stalk about the countryside— raping, looting, murdering, clashing with each other. Food production will all but cease. The hungry will fight to the death over scraps of garbage. Millions will starve, and millions
more will die from infectious diseases. Behold the vision of Civil War II.

Robert (qslv)

Sounds like Europe and Asia in the 20th century. Sounds like Africa in the 19th century and today. Ignorant and uninformed people point the finger at The U.S. only, because it’s politically correct to practice self loathing. This is and always has been a GLOBAL problem. Now light up your blame-throwers and attack the U.S. and give every other a pass. Hypocrites! You can’t fix stupid and you can’t graft a new idea onto a closed mind.

seth datta

Here in the uk, the police state and surveillance/control grid is being put into place to ‘manage’ those who the banksters perceive to be a threat to their power. This is the basis of combatting terrorism – its all about perpetuating the existing financial oligarchy and its sick.

We’re number 1 in hosting this corrupt elite.

WeRThrough

Seth,
I am not so sure you are still “number 1 in hosting this corrupt
elite” anymore over there I the UK. We have advanced in that respect 10x
over since the inauguration of our latest POS POTUS…

El Pollo de Oro

Seth Datta: I’m an American who has done a lot of traveling in the UK. Been to London, Manchester, Liverpool, Newcastle, Blackpool, York, Edinburgh, Belfast, Glasgow and other places. And yes, the bankster fascists are poisoning the UK as much as they are poisoning The Banana Republic of America. New Labour and the Tories are both culpable, in my book.

Flying into Heathrow is as bad as flying into a BRA airport. The whole mood is fear, intimidation and jackbooted authoritarianism. If I fly into Madrid, Paris, Rome, Barcelona or Milan, it’s pretty straight-forward. They check your passport, make sure it’s OK, stamp it and you’re good to go. Fly into Heathrow, and you can expect an interrogation. It’s done under the guise of anti-terrorism, but it’s really about the banksters exercising their jackbooted authority.

By the way, Max Keiser on RT has had a lot to say about the banksters’ crime activities in the UK.

Ralfine

Reciprocity.

You are interrogated because you are an American. And we know that Americans are drug users, support dictators, trade in arms, engage in industrial espionage, torture, rendition, etc.
But you probably have nothing to hide, so nothing to worry about.

When I fly into Heathrow it is very straight forward, although it can take a while to clear the snow or rain or fog. Or maybe it’s my rainbow T-shirt.

El Pollo de Oro

Well, I certainly can’t disagree about Americans who “support dictators, trade in arms, engage in industrial espionage, torture.” You just described American politicians to a tee.

The Good, The Bad, The Ugly

Salvador Allende was a Chilean Marxist who naturalized all the industry in the Country & made it illegal for people to own property. He was elected by a “minority” and one week later he was dead because the middle class of Chile wanted to regain power at any price because the people did not want Communism which is what you are preaching.

ReadMuch

Read you history, he was outed by CIA. Clear evidence, no doubt.

The Good, The Bad, The Ugly

During the Allende’s time in office, Chilean politics ascended to a state of civil unrest amid strikes, lockouts, economic sanctions. You are correct in that the CIA sponsored propaganda, but a failed coup in June 1973. Allende’s supporters, some armed with weapons smuggled into Chile by the Soviet Union and particularly through Cuban assistance, had begun preparations for a guerrilla war in the event of a “golpe” (coup). Similarly, right-wing groups had accumulated weapons and, by 1973, had begun to resist some of the unlawful and unauthorized expropriations of private property. This is what the people of Chile hated most about Allende that he was a Communist and he wanted to take their right to own private property.

On September 11, 1973 a successful coup led by General Augusto Pinochet overthrew the government of Allende. NOT THE CIA as you has said.

During the bombing of the Presidential palace by the Chilean Air Force President Allende committed suicide, thus, terminating the period of Chilean history known as the “Presidential Republic” (1925–1973).

Sir, you stand CORRECTED.

piccadillybabe

They call it institutionalized crime, same here in the USA.

chilller

A ponzi scheme that has painted itself into a corner. The architects who devised this scheme knew this day would come but would make fantastic amounts of money in the meantime. How could anyone honestly allow a person, state or country to get to this point? They couldn’t…but banks, having no conscience or honor…have no problem. And as they buy off our politicians, so they go as well.

cherylmeril

All you have to do is watch the program American Greed to see it as a trend. If those at that level behave that way imagine how in the gov’t and banking system.

Michael from Australia

A guy named Lindsey Williams who claims to be in contact with the global elites (since he used to be a chaplain on one of their oil companies), said in one of his latest video’s “NEW SIGNS OF THE ELITE” that the warning sign of when a crash will happen is when the federal reserve raises the interest rates.
This will start to crack the derivative market, and by this stage, if you are not in gold, you will lose the value of your money.

His view,not mine

NEW SIGNS OF THE ELITE
NEW SIGNS OF THE ELITE”

Alex Smart

This perfect financial storm has been brewing since 2008 . Everyone knows what the eventual outcome will be. The only question is when will it make land fall? Very few have made preparations for devastating consequences of this end game storm.

Tim

So the Fed has backed off on the “taper” talk for now, but what happens if the yield on 10 year U.S. Treasuries continues to rise even with the wild money printing that the Fed has been doing?

That’s a very good question. I imagine that the Fed would try to push rates back down by increasing the money printing. If that doesn’t work then I don’t know what they’d try.

You know, I really wonder if any of Bernanke’s potential successors (e.g. Yellen, Summers) understand just how precarious the situation is. The Wizard himself said recently that if they were to “tighten” current monetary policy the economy would tank.

I don’t see any way out of the situation they’re in. They’re really just buying time, but eventually something is going to give.

Tony Murphy

A silly question, maybe. But is not every debt someone else’s asset? If the banks can’t pay back their derivatives, isn’t the same amount of money circulating in the economy, just that different people own it?

68Impala

That’s was always my take. One side wins the other loses.

andrewp111

Bernanke knows how bad things are. That’s why he is leaving at the end of January.

Barry Sucks

Wellcome to a obama’s economy.

Ralfine

obama doesnt call the shots. he was put there on the stage so that everyone can throw eggs, while the deals are made at the beach.

GSOB

President Obama is the shot.

jokyjo

USA! USA! USA! TPTB will probably drag this out for years and slowly bleed all of us to our demise. As long as the sheeple have their bread and circuses nobody will do anything. NFL preseason starts soon – if the economy collapses half the population won’t even know until its too late. The USA is on the decline, prepare accordingly. Good luck out there.

Chris Lee

They can’t let it happen.. at least not until the 2014 mid term elections are concluded… If the 10 yr yield gets too high the Fed will simply expand their QE program to bring the yield down

Steve

As Chicken Little said: “The sky is falling. The sky is falling”.
Get real people. Nothing is going to happen.
nothing can happen. Our gracious leaders have everything under control. Trust them.

Tony Murphy

Could I ask what’s maybe a silly question, maybe. But is not every debt someone else’s asset? If the banks can’t pay back their derivatives, isn’t the same amount of money circulating in the economy, just that different people own it?

What will save the economy is the humble man who goes every morning to collect raw materials, fashions a desired product from it, and sells it for a price the public is willing to pay. It’s really that simple. All those ministers, officials, managers, bankers, politicians, etc. have done is put themselves into that simple equation to siphon what they can out of it.

The economy will be saved by the individuals selling homemade doughnuts, or simple handmade furniture, or doing work through barter when those too poor to pay can exchange a pair of home knit wool socks for some plumbing work (I still wear them; 7 years old and comfy as can be!)

All the “leaders” need to do is scale back their operations and take a few hits financially. For the most part; they’re not that needed – they’re just very needy.

davidmpark

Sir Walter Royce had carved over his mantle, “Whatever is rightly done, however humble, is noble.” The common, simple men will save this economy.

Trailer Park Investor

Japan is about to implode,
China is on the economic edge,
Europe is a fast freight train going over a cliff, America is about to hit a cement wall at 500 MPH. And then there are derivatives, that’s a bomb WITH the fuze lit and about to explode – everywhere.
Something has gotta give AND SOON
Hope Your Ready?
Time is oh so short!

Douglas M. Green

The financial system collapse is more likely than the life insurance example above. While people do not all die at once from cancer, car accidents etc., banks can and will die at once for the same reason as others do if rates rise much and they have to pay more to get deposits than they receive on low interest loans they made. Also, they depend on other banks to make good on deals and derivative bets. Counterparty failures could lead to a domino effect of failures as banks that thought they were hedged on a risk are really not when the counterparty fails to make payment.

BlackDog

They have written trillions upon trillions of dollars worth of
interest rate derivatives contracts, and they are betting that interest
rates will not go up rapidly.

But what if they do?

Then the US Federal Government will ‘step in’ and nullify all that debt. Like it’s no big deal. And about 5 days after that, we will be right in the middle of World War III. And from Washington’s perspective, that’s a winable and do-able option. Arrogance defines this Administration. That ‘Presidential Strut’ will be paid for with our lives. And our children’s lives. THAT’S what you better prepare for!

Kim

Haha — the bad news is it shot up 16 basis points today making up for yesterday’s “rebound”

Gay Veteran

full-time employment is being replaced by part-time employment, and this has been going on for years.
And what in the world is going on???????
no bible thumpers have shown up yet

ian

and yet nothing will happen and life will continue and people will continue buying mcmansions and drive expensive cars and have large families and buy every new electronic gadgets available, and malls and movie theaters will remain packed..

Seriously folks…..get a life.

greyprepper

Umm… Are you rich? Or do you still live at home with your parents? I’m on a budget and I’ve noticed grocery prices, utility bills, taxes and every other damn COL expense go up up UP! It would seem that the regulars on this blog have noticed as well. Times are getting tougher for the working class. So excuse us all to hell for being concerned. Brat.

El Pollo de Oro

Greyprepper: It’s very difficult to take anything Ian has to say seriously. Denver’s favorite latte limousine liberal recently talked about how he’d been to Europe, and everything’s just fine over there. Yeah, right. Youth unemployment rate of 57% in Spain, 40% in Italy (Europe’s third largest economy), 62% in Greece, 32% in Ireland, 42% in Portugal…….. no worries there.

ian

latte limousine liberal? Dude, i make 23,000 dollars a year and my rent is 347. I am still driving a 2001 subaru. I am not wealthy by anyone’s standards, but i know reality when i see it.

El Pollo de Oro

So you aren’t really a later limousine liberal. You just play one on TV.

ian

Brat? I have never earned over 23 thousand a year my entire life. And i live in a tiny flat by myself. Nice try.

squashpants

I just looked at the rate end of today, and it is sitting at 2.74%. Just sayin’…

Justin Case

Just another way for us to play the game. Get a bunch of credit cards, purchase tools, (real tools also gold, silver etc.) that you can make money with in a new economy and then do a BK to walk away from from most of the debt. If the money is printed from thin air then it is stolen from the people and that means it is not stealing for me to buy on credit and then go do a BK.

andrewp111

To do this you have to hide the gold from the bankruptcy court. That is called bankruptcy fraud, a serious felony.

JailBanksters

But what these Banks are calling assets are things like the House on Prairie, and what they expect to earn once the farmer pays it all off. If guy can’t pay it off and the house goes to zero, there’s no asset. And all those side bets on that house would also go to zero. You might as step inside the Tardis and go back to 2008. They have no REAL assets, that are fully paid for and own right now.

Sam Weiss

Why don’t our government use eminent domain give these banks a big middle finger. We should of did what Iceland did. they bailed out their people and sent the banks to prison

El Pollo de Oro

No, no “fear based economic collapse prepper morons in Europe.” Only massive demonstrations and unrest in the streets of Madrid, Rome, Athens and other cities. Only unrest galore. But I’ll give you one thing, tio: the people in many of those European countries ARE working together. They’re taking it to the streets big time in huge numbers. I really have to salute the Spanish and Italian and Portuguese indignado youths for standing up to the bankster devils who’ve caused them so much misery. Que vivan los indignados y su lucha en las calles contra los puta banksters!

Normalized Interest rates will force prices of all US denominated assets to return to more reasonable prices, which will be good for average people. Home prices will drop to more affordable levels, savers will get real interest on their savings, and Banks without collateral to cover their derivative bets will fail. All good things. I look forward to the collapse of the bubble economy.

nck

actually, if everyone died they wont go bust, no one to pay and no one to do the paying.

Boni Biggun

10 Year Treasury Note:
2.77%! 8/15/13 12:39 PST

margsview

So this time main street lets derivative street pay the piper. Taxpayers have subsidized corporate/bankers for decades only to have their last gambling debts dumped on them. No more, as they are so quick to say –there is no free lunch—. Taxpayers should help small businesses and grow local economies.

Far Out

We are all in a sinking boat, some of us are already in a lifeboat, many will not make it to a lifeboat. Those waiting for Obama to throw them a line will drown.